Before I begin talking about Asia I wish to first express my sincere condolences to the victims of the multiple terrorist attacks that took place on September 11th in the United States. I wish to renew my call for the entire world to join hands in order to eradicate terrorism.

The terrorist attacks have had major negative impact on economic activities around the world and the fear now is that the economies of the U.S.， Europe and Japan and the rest of Asia， which already had been slowing down since late last year， may simultaneously fall into recession.

Governments and CEOs， i.e. business leaders， around the world need to cooperate now more than ever with strong wills and renewed confidence to overcome the current difficult situation and prevent simultaneous world-wide recessions. The world economy must be stabilized as soon as possible and put on track to peace and prosperity.

Cooperation and coordination by us all and beyond national borders and corporate affiliations will be needed. We cannot afford to be bound by our individual countries or companies.

2.Lessons learned in the four years since 1997

We all have learned many lessons from the financial crisis in 1997.

The first lesson is that a financial crisis in one country spreads rapidly throughout the region and to the entire world like a contagion. The same might happen again as economic globalization and information technology are expanded in the new age.

The second lesson is that the financial system needs to be strengthened. We still are suffering from non-performing loans in many countries that are dragging down financial institutions. They have become exposed but their disposal remains a something that needs to be done as soon as possible. In Japan， the government and the private sector are giving top priority to resolve this issue.

The third lesson is that the crisis has also brought with it a new appreciation of the depth of interdependence between the economies of the Asian Region making us aware of just how the economies of Asia depend on each other. If I may introduce some of our experiences， most Japanese companies including our own that have invested directly in Asian countries， have not pulled out of the region. While in many cases there have been losses we have restructured or injected new capital into our local operations with our local partners and have tried our utmost to make up for lack of local demand by increasing exports especially to APEC countries. I am happy to say that most local operations have now returned to being profitable and we realize that regional trade is being revitalized by making the best use of each location's particular strengths or competence.

3.From vertical integration to horizontal development

Globalization has already progressed to the point at which business activity is conducted almost without regard to national borders.

In the past， Japanese companies interested in increasing business activities in Asia did business by something we might call vertical integration. More recently， however， they have changed their thinking in favor of a horizontal approach. This horizontal approach began in recent years in order to explore the best competitiveness by making the best use of the particular strengths and competence of individual countries in the region.

Thanks to new business models with IT， application of supply chain management has made it possible to have efficient regional procurement of a variety of parts which then can be assembled into finished products in any country where the infrastructure best suitable to that industry is available. “Concentration and Diversification” and “Borderless Business Systems” are the two basic business strategies being sought today. There is also a growing trend in Asia to establish strategic cross-border alliances， likewise the case of China， Korea and Japanese steel mills collaboration. The key words of success are “Competition and Co-existence”。

4.East Asian regional economic cooperation

We find now that Asian governments too have been cooperating more closely in the recent 4 years. The recently-launched ASEAN+3， the currency stabilization scheme built on the Chiang Mai Initiative and the launching of AFTA as well as new-age free trade agreements concluded bilaterally between countries of the region will all be complementary to the WTO. With this in mind I believe that a framework for an open regional economic area is taking shape.

Of course we all know that there is no country called Asia. In fact countries in Asia are not only vastly different in their sizes and stages of development of their economies but also in a variety of other areas ranging from economic systems to their individual cultures， histories， and religious and ethnic composition. Due to these many differences， and more especially the various stages of economic development， any attempt to integrate the economies of Asia， would be more difficult and would take much longer than NAFTA or the EU integration. Nevertheless， I hope that talks will continue in such a way to make possible a regional economic integration in the dawning of this new era.

5.China， the region's emerging economic giant

I would now like to say a few words about China. I believe that 2001 is an epoch-making year for China both politically and economically.

First of all， Beijing has been chosen as the venue for the Summer Olympic Games in 2008. Secondly， the country will accede to the WTO， and thirdly， the APEC Leaders' Meeting is being held in Shanghai.

The Chinese economy achieved real growth of 8% in 2000 and is expected to have similar growth in 2001 and onwards， even though there are growing signs of a simultaneous recession throughout the rest of the world economy. In China's economic relations with Japan， two-way trade reached US$85 billion and is expected to grow to between US$95 and 100 billion in 2001/02. Japanese foreign direct investment to China， which was in decline since 1996， also turned positive last year. Once membership in the WTO is realized， transparency on par with international standards will be ensured and direct investment should grow further， especially as more manufacturers shift their production operations to China.

I call China “the region's emerging giant”。 Firstly “as a manufacturing country” supported by rapidly improving technical levels and a most competitive labor force. The country is growing into a major producer of a wide range of manufactured goods. As you well know， China is already the world's biggest manufacturer of color TV's， air conditioners， motorcycles， DVD players， and the like.

Secondly “as a consumer market”。 China has 1.3 billion potential consumers along with a huge land mass. We look forward to the Chinese government skillfully creating a good balance between these two aspects of growth.

6.Competition and coexistence

From the standpoint of trade in the region， China is in competition with most ASEAN countries in many product areas and there is some talk in those countries that China poses an economic threat. Japan， in comparison to those countries， enjoys a more complementary relationship with China. In fact， competition and coexistence with China is a major concern but it is also the biggest expectation for business people from all countries in Asia.

At the same time， if China is to join the WTO and look for to achieving growth and long-term prosperity in the world market economy， it will be important not only for it to create an environment conducive to free trade and investment but also to make cooperative relationships with other Asian countries ranging from industrial and financial cooperation to technological tie-ups and the exchange of human resources. The most important key to success， it seems to me， is for China and other countries of Asia to build win-win relationships.

7.Significance of western development

Japan's joint public-private mission to China last month took a serious look at China's western region. I have confidence in the large-scale development of the western region for the following reasons. First， the West is a huge area that accounts for almost two thirds of China's total land mass. It is also rich in natural resources and energy. Second is the “conservation of the ecological environment”。 Third， it is hoped that the development of the interior will help narrow the current economic gap with the coastal regions. As the economic level of the interior is brought in line with that of the coastal regions， it will generate massive domestic demand and contribute to the growth of China as a giant consumer market. We in the Japanese business community wish to participate in this project technically and financially in such areas that we have accumulated skills and expertise to realize the well-balanced growth of China as a manufacturing country and as a consumer market.

To me， the conservation of the environment and the development of resources and logistical infrastructure are the area of importance with great interest. I also believe that the countries of ASEAN will find a way to create win-win relationships through bilateral and multilateral cooperation in which each country contributes its particular strengths for mutual benefit.

8.Japan's role

If I may add to what Minister Hiranuma said earlier our first job in the business community is to do all we can to achieve the earliest possible recovery of the Japanese economy. Structural reform is a must for us. We are prepared to put up with another year or two， i.e. through 2002/03， with a situation in which the Japanese economy continues to painfully reform though at the same time it will productively transform. This means that many revived companies with improved competitiveness will power the Japanese economy in the 21st century and at the same time many others will be forced out of the market. I am convinced that once that process is complete the Japanese economy will return to a genuinely sustainable growth path and will be able to make greater contributions to the growth of the Asian economy.

Internationalization within Japan has seen significant progress thanks to deregulation in the country and inward investment has increased remarkably especially from Europe and North America. I hope that investment from other Asian countries will increase in the future so that a deeper two-way relationship with them will grow.

In order to nurture genuine interdependence， we would like to strive to promote not only the movement of goods and capital but also people-to-people and cultural exchanges， as well as mutual understanding， so that relationships of understanding and trust will be further strengthened.

Finally， the Japanese government's “ODA policy” likely will continue to play an important role in Asia. Qualitative change of ODA is in order so that it will meet the changing requirements of the times and the changing needs of the recipient.

In closing， once again congratulations on the success of the APEC CEO Summit. Even though the world is undergoing never before experienced difficulties due to terrorism， we are here today with strong wills and confidence in a better future. I remain dedicated to contributing to Japan's recovery and to the future prosperity and well-being of us all.